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Amendments to National Instruments 81-102 and 81-104 relating to Alternative Mutual Funds [Completed]

Ef­fec­tive date:

Subject to Ministerial approvals, the amendments and related changes are expected to come into effect on January 3, 2019.

Last up­dated:

October 2018

Overview

On October 3, 2018, the Canadian Securities Administrators (CSA) published amendments that establish a comprehensive framework for alternative mutual funds (currently called commodity pools) and streamline the regulation of non-redeemable investment funds.

The amendments rename “commodity pools” as “alternative mutual funds” and streamline the regulatory regime governing these products by moving most of the regulatory framework in National Instrument 81-104, Commodity Pools, into National Instrument 81-102, Investment Funds.

The amendments also update the investment restrictions for alternative mutual funds to allow greater flexibility with investing strategies, with a focus on strategies typically associated with “liquid alternatives”. These include increased concentration limits, more flexibility for fund-of-fund investing, an increased ability to borrow cash for investing purposes, and increased flexibility to short-sell and around the use of derivatives, amongst others. The changes also simplify the prospectus requirements for alternative mutual funds by fully bringing them within the prospectus disclosure regime applicable to other mutual funds. Similar investment restrictions are also being introduced for non-redeemable investment funds. The amendments also include changes that will codify certain routine exemptive relief granted to mutual funds.

Subject to Ministerial approvals, the amendments and related changes are expected to come into effect on January 3, 2019.

Recent activities

October 2018

On October 3, 2018, the CSA published amendments that establish a comprehensive framework for alternative mutual funds (currently called commodity pools) and streamline the regulation of non-redeemable investment funds.

September 2016

On September 22, 2016, the Canadian Securities Administrators (CSA) published for comment proposed amendments to National Instrument 81-102 and National Instrument 81-101 as part of the final phase of the CSA’s efforts to modernize the regulation of publicly offered investment funds. See the related press release.